Duty to Serve

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It sounds as though we may go back to the old military draft system. No, it’s only for Fannie Mae and Freddie Mac requirements to provide programs to serve the needs of very low, low, and moderate-income home buyers.

FHFA announced it is extending the deadline for comments on their Evaluation Guidance to meet these requirements from May 15^th to June 7^th. They announced plans on how they intend to meet these “Duty to Serve” requirements which can be viewed at:

• Guidance
• Fannie Duty to Serve
• Freddie Duty to Serve

In 2008, the Housing and Economic Recovery Act set the requirements for the agencies to serve underserved markets in manufactured housing, affordable housing preservation, and rural housing. They now have set out their plans on how they intend to do so.

You’ve probably already seen some of the programs being released, or about to be released, by the agencies to help meet these targets.

These are geared toward helping more first-time and low to moderate income potential homebuyers realize their American Dream. That’s a good thing.

Here we go again. Everyone wants to help increase access to home financing to increase homeownership rates.

It is a noble cause and one that can prove beneficial to consumers, Realtors, Builders, lenders, and the economy. But, a cause that can also prove to be devastating if not done well and carefully monitored.

It seems that lenders have a good handle on originating quality loans to qualified consumers. Defaults and defects are down and loan performance is up. All good for everybody and something that is bringing confidence back to investors.

The answer isn’t in easing and expanding the credit box to help more consumers qualify. It’s in creating a box that is fair and equitable to all consumers, and then originating good, quality, complaint loans that fit.

To just expand the box to allow more people to qualify for home financing can once again prove disastrous; undoing all the good the industry has done over the past few years.

So, please review the FHFA plans carefully and once again make your voice heard. We’ve been down this road before and the trip didn’t end well. Let’s learn from the past and make things better this time around.

We all have a duty to serve.

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.